In 1993, State Street launched the SPDR S&P 500 ETF.

Few people realized they were witnessing the beginning of one of the most successful financial products in modern history. For years, exchange-traded funds remained a niche corner of the investment industry. Traditional mutual funds dominated asset management. Many investors struggled to understand why ETFs mattered. Critics questioned whether the structure offered meaningful advantages over existing products.

Three decades later, global ETF assets exceed $21 trillion.

The transformation did not happen because ETFs created new asset classes. It happened because they changed how investors accessed existing ones.

Today, a growing number of asset managers, banks and financial infrastructure providers believe tokenization could follow a similar path.

The comparison may sound ambitious. ETFs and tokenized assets solve different problems. ETFs transformed distribution and accessibility. Tokenization focuses on settlement, ownership and financial infrastructure. Yet the adoption pattern increasingly looks familiar. A once-obscure technology is attracting major institutions, gathering regulatory attention and beginning to move from experimentation toward commercialization.

The most important development may not be the technology itself.

It may be the institutions now building around it.

The ETF Industry Was Once A Tiny Market

It is easy to forget how long it took ETFs to become mainstream.

The first ETF launched in 1993. Growth remained modest during the industry’s early years. Many investors viewed ETFs as specialized products rather than core portfolio holdings. Traditional mutual funds remained the dominant investment vehicle.

Over time, however, several advantages became impossible to ignore. ETFs simplified access to diversified portfolios. They offered intraday trading, transparency and generally lower costs than many actively managed funds. As large asset managers entered the market, investor confidence increased. Liquidity improved. Product offerings expanded.

The result was a compounding adoption cycle.

According to ETFGI, global ETF assets reached a record $21.91 trillion in April 2026. The industry attracted more than $856 billion in net inflows during the first four months of the year alone. ETFGI also reported 83 consecutive months of net inflows, illustrating how deeply ETFs have become embedded within global investment portfolios.

The United States remains the largest market. The Investment Company Institute reported U.S. ETF assets reached approximately $14.8 trillion by April 2026, up substantially from the previous year. Meanwhile, Citigroup recently projected U.S. ETF assets could reach $25 trillion by 2030.

None of those numbers would have seemed realistic during the ETF industry’s early years.

That is precisely why the comparison with tokenization is attracting attention.

Tokenization Is Still Tiny

Compared with ETFs, tokenization barely registers.

Depending on methodology, estimates for tokenized real-world assets currently range between roughly $20 billion and $30 billion. CoinGecko estimated the market at approximately $19.3 billion at the end of March 2026. Binance Research placed distributed tokenized real-world asset value above $31 billion during 2026.

Even the higher estimate represents a fraction of ETF assets.

That difference often fuels skepticism.

Critics point to the size gap and conclude tokenization remains a niche market. ETF history suggests a different interpretation. Every transformational financial product begins as a niche market. The relevant question is not whether tokenization is large today. The relevant question is whether the conditions exist for sustained institutional adoption.

Recent developments suggest they do.

Tokenized U.S. Treasuries alone now account for nearly $15 billion according to RWA.xyz. More than 60,000 holders participate in the category, which includes products from BlackRock, Franklin Templeton, Ondo and other providers.

The industry’s early winners are not speculative meme assets.

They are some of the most conservative financial instruments in the world.

That fact alone should attract attention.

BlackRock Is Following A Familiar Playbook

Perhaps the strongest argument for tokenization comes from BlackRock.

The firm played a central role in the rise of ETFs through its iShares business. It understands how financial products evolve from niche offerings into core market infrastructure.

Today, BlackRock is one of the largest participants in tokenization.

Its BUIDL fund has accumulated roughly $2.3 billion to $2.4 billion in assets, making it one of the largest tokenized Treasury products in the market. More important than the fund’s size is what it represents. BlackRock is not treating tokenization as an experimental side project. It is committing resources, infrastructure and distribution capabilities to the sector.

This mirrors what occurred during the ETF industry’s expansion.

Institutional adoption accelerated when large asset managers entered the market. Their participation increased confidence, attracted liquidity and encouraged regulators and service providers to develop supporting infrastructure.

BlackRock’s involvement sends a signal that tokenization is moving beyond proof-of-concept discussions.

The market is beginning to commercialize.

Franklin Templeton Shows The Technology Is Already Working

BlackRock is not alone.

Franklin Templeton’s OnChain U.S. Government Money Fund has become one of the most important examples of tokenization in practice. The fund uses blockchain technology as its official system of record for transactions and share ownership.

This distinction is important because tokenization is often misunderstood.

Many people assume tokenization simply means creating digital representations of existing assets. The more significant innovation lies in how ownership, transfers, settlement and recordkeeping occur. Blockchain infrastructure can reduce reconciliation requirements, improve transparency and potentially create more efficient market operations.

In other words, tokenization is less about creating new assets and more about modernizing how existing assets move through the financial system.

That concept resembles the ETF story.

ETFs did not invent stocks or bonds. They improved how investors accessed them.

Tokenization seeks to improve how assets are owned, transferred and settled.

What Problem Is Tokenization Actually Solving?

One reason tokenization discussions often become confusing is that participants focus on technology rather than economics.

The technology matters.

The economic problem matters more.

Traditional financial markets rely on multiple intermediaries. Settlement processes often involve custodians, transfer agents, clearing systems and reconciliation procedures. Those systems function well, but they also create complexity, delays and costs.

Tokenization attempts to reduce some of that friction.

Assets can potentially move faster. Ownership records can become more transparent. Collateral can become more mobile. Settlement can occur closer to real time. Financial products can become programmable, allowing certain processes to execute automatically.

These benefits explain why banks, exchanges and infrastructure providers continue investing in the sector.

The objective is not necessarily to replace existing markets.

It is to make them operate more efficiently.

The Forecasts Are Enormous

Forecasts for tokenization vary dramatically, which reflects both the opportunity and uncertainty surrounding the sector.

McKinsey estimates tokenized assets could reach approximately $2 trillion by 2030, excluding cryptocurrencies and stablecoins. The consultancy suggests a potential range between $1 trillion and $4 trillion.

Boston Consulting Group and ADDX are significantly more aggressive. Their research estimates tokenized assets could reach $16.1 trillion by 2030, equivalent to roughly 10% of global GDP.

The gap between those forecasts is enormous.

Yet even the conservative estimate implies growth many times larger than today’s market.

The disagreement concerns the speed of adoption rather than the direction of travel.

The Risks Are Real

The ETF comparison is useful, but it has limits.

Tokenization still faces obstacles that ETFs largely avoided.

Regulation remains fragmented across jurisdictions. Secondary market liquidity remains limited. Interoperability challenges persist between blockchain networks. Custody standards continue evolving. Investor protection frameworks remain incomplete in many markets.

These issues help explain why institutional adoption has progressed steadily rather than explosively.

The industry still requires infrastructure development before tokenization can achieve mainstream scale.

ETF growth accelerated only after market structure, regulation and liquidity matured. Tokenization will likely follow a similar path.

Takeaway

The argument for tokenization is not that it will replace ETFs. The argument is that it increasingly resembles ETFs during their early years. Both began as technical innovations that appeared more interesting to infrastructure providers than to ordinary investors. Both attracted skepticism because existing systems already functioned adequately. Both gained momentum once major institutions entered the market. Today, BlackRock, Franklin Templeton, banks and financial infrastructure providers are investing heavily in tokenized assets, while the market grows from billions toward what many believe could eventually become trillions. ETFs transformed how investors accessed financial assets. Tokenization aims to transform how those assets move through the financial system. The scale remains vastly different, but the adoption pattern is becoming difficult to ignore.